Contract Interpretation Flashcards
What is the Parol Evidence Rule?
When the parties to a contract express their agreement in a writing with the intent that it embody the final expression of their bargain , any other expressions, either written or oral, made prior to the writing, and any oral expressions contemporaneous with the writing, are inadmissible to vary the terms of the writing.
What is required to invoke the Parol Evidence Rule?
(1) A writing signed by both parties
(2) Prior contemporaneous expressions that vary the terms
What are the exceptions to the Parol Evidence Rule?
Exceptions to the Parol Evidence Rule include:
(1) Formation Defects - Earlier words of the parties for the limited purpose of determining whether there is a defense to formation (e.g., misrepresentation, fraud, duress).
(2) Condition Precedent - If a party asserts that there was an oral agreement that the written contract would not become effective until a condition occurred, evidence of the understanding may be offered.
(3) Ambiguity - Earlier agreements to resolve ambiguities in the contract.
Under the UCC, what additional exceptions apply to the Parol Evidence Rule?
If there is no merger clause (“this is the complete and final agreement”), a party can seek to add consistent additional terms.
Under the UCC, a contract’s written terms may always be explained or supplemented by: (1) course of dealing, (2) usage of trade, and (3) course of performance.
What effect does a Subsequent Expression (rather than prior) have under Common Law?
A subsequent expression is not barred by the Parol Evidence Rule, and may be offered as a modification. Under common law, subsequent modification requires additional consideration.
What effect does a Subsequent Expression (rather than prior) have under the UCC?
A subsequent expression is not barred by the Parol Evidence Rule, and may be offered as a modification. Under the UCC, subsequent modification does not require additional consideration, but must meet the Statute of Frauds where applicable.
